The National Company Law Appellate Tribunal (NCLAT) set aside an order dismissing a restoration application for want of prosecution, holding that the 30-day limitation under Rule 48 of NCLT Rules does not apply when delay results from counsel's deliberate non-appearance rather than negligence. The Tribunal emphasized that Section 238A of the Insolvency and Bankruptcy Code, 2016 (IBC) makes Section 5 of the Limitation Act, 1963 applicable, allowing condonation of delay to meet the ends of substantial justice.
Background & Facts
The Dispute
The Appellant, Eastern Power Distribution Company of Andhra Pradesh Limited (a statutory distribution licensee under the Electricity Act, 2003), supplied electricity to the Corporate Debtor, M/s Impex Metal & Ferro Alloys Limited. After the Corporate Debtor was placed under Corporate Insolvency Resolution Process (CIRP) vide order dated 01.03.2018, a dispute arose regarding remittance of electricity consumption charges for the period 01.03.2018 to 24.04.2019. The Adjudicating Authority (NCLT, Kolkata Bench) assessed these charges at Rs. 20,72,84,722/- in its order dated 05.10.2021, directing payment under Section 53 of the IBC.
Key Facts
- The Corporate Debtor was placed under CIRP by order dated 01.03.2018 of the Adjudicating Authority
- Communication about appointment of Interim Resolution Professional (IRP) was received by Appellant on 21.03.2018
- Electricity supply was restored on 04.04.2018 after Appellant's order dated 04.04.2018 assured prompt payment of consumption charges
- Consumption charges were initially raised for Rs. 58,68,44,160/-; IRP paid Rs. 37,95,59,438/-, leaving balance of Rs. 20,72,84,722/- due
- Adjudicating Authority's order dated 05.10.2021 directed Appellant to approach Liquidator for payment of Rs. 20,72,84,722/- under Section 53 of IBC
- Appellant sent letter dated 13.11.2021 to Liquidator seeking payment of the balance amount
- Due to non-payment, Appellant filed I.A. No. 1061/2021 on 01.12.2021 praying for: (i) Direction to Liquidator to pay CIRP Costs of Rs. 20,72,84,722/- upfront under Section 53(1)(a) IBC (ii) Any other orders deemed fit
Procedural History
- 08.11.2023: I.A. No. 1061/2021 dismissed for want of prosecution (Appellant's counsel absent)
- 31.08.2023: Adjudicating Authority passed order giving last opportunity to appear, failing which matter would be dismissed
- 25.07.2024: Appellant filed Restoration Application No. 1570/2024 seeking recall of 08.11.2023 order
- 13.11.2025: Impugned order passed rejecting restoration application on limitation grounds
- 25.09.2026: Judgment under analysis pronounced
The Parties' Positions
Appellant: Contended that counsel Mr. Rakesh Kumar Sharma deliberately absented himself despite assurances; relied on Rafiq vs Munshilal (1981) 2 SCC 788 to argue party should not suffer for counsel's default; asserted delay was condonable under Section 238A IBC and Section 5 Limitation Act.
Respondent: Argued restoration application was barred by Rule 48 NCLT Rules (30-day limitation); relied on V-Con Integrated Solutions Pvt. Ltd. vs. Shreeram Technology Services Pvt. Ltd. (Company Appeal (AT) (Ins) No.283 of 2025) to assert appellant lacked vigilance; claimed delay of seven-and-a-half months was inexcusable.
Relief Sought
Appellant sought:
- Quashing of impugned order dated 13.11.2025
- Recall of order dated 08.11.2023 dismissing I.A. No. 1061/2021
- Allowance of I.A. No. 1570/2024 (restoration application)
- Consideration of I.A. No. 1061/2021 on merits
The Legal Issue
The central question was whether Rule 48 of the NCLT Rules, 2016 (prescribing 30-day limitation for filing restoration applications after dismissal for want of prosecution) applies when the delay is attributable to the counsel's deliberate non-appearance and lack of bonafides, rather than the appellant's negligence or lack of vigilance.
Arguments Presented
For the Appellant
Reliance was placed on Rafiq and another vs. Munshilal and another (1981) 2 SCC 788, where the Supreme Court held that a party should not suffer due to counsel's default when the party has done everything in their power to participate. The Appellant argued that counsel Mr. Rakesh Kumar Sharma had deliberately absented himself despite assurances of office in Kolkata and regular practice before NCLT Kolkata, which later proved false. It was contended that Section 238A of the IBC makes Section 5 of the Limitation Act applicable, allowing condonation of delay for substantial justice. Reference was also made to Oriental Insurance Co. vs. Smt. Sheela Devi and ors. (AIR 2006 HP 94) to establish that Rule 39 of Bar Council of India Rules requires no-objection from prior counsel before engaging new counsel, which was wrongfully withheld here.
For the Respondent
The Respondent relied on V-Con Integrated Solutions Pvt. Ltd. vs. Shreeram Technology Services Pvt. Ltd. (Company Appeal (AT) (Ins) No.283 of 2025) to argue that the appellant lacked vigilance by not contacting counsel despite knowledge of non-appearance since early 2023. It was submitted that the restoration application was filed seven-and-a-half months after dismissal (08.11.2023 to 25.07.2024), exceeding the 30-day limit under Rule 48 NCLT Rules, and thus barred by limitation. The Respondent asserted that the appellant should have changed counsel diligently upon knowing of counsel's non-appearance in early 2023.
The Court's Analysis
The Tribunal began by noting that Rule 48 NCLT Rules governs restoration when applications are dismissed for non-prosecution, but emphasized that Section 238A of the IBC modifies the application of limitation law. It observed:
"Section 238A. Limitation.--The provisions of the Limitation Act, 1963 shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be."
The Tribunal held that Section 238A carves out an exception to the general rule of limitation, vesting discretion in the Tribunal to apply Section 5 of the Limitation Act based on case-specific circumstances. It distinguished V-Con Integrated Solutions on facts, noting that in the present case, the counsel's non-appearance was deliberate (backed by mens rea) due to professional rift and unpaid bills, not mere negligence. The Tribunal stated:
"In those eventualities, and the circumstances under which restoration was required to be considered, as the circumstances were entirely distinct to the one where dismissal in default is normally caused because of the negligence of the Counsel, his staff or office."
Crucially, the Tribunal found that the appellant had persistently sought a no-objection certificate from the earlier counsel (Mr. Rakesh Kumar Sharma) from June 2023 onwards, which was wrongfully withheld until July 2024 on the pretext of unpaid bills. This demonstrated the appellant's diligence, countering the respondent's vigilance argument. The Tribunal affirmed that under Rafiq, a party cannot be made to suffer for counsel's deliberate default when the party has exhausted all remedies:
"The disturbing feature of the case is that under our present adversary legal system where the parties generally appear through their advocates, the obligation of the parties is to select his advocate, brief him, pay the fees demanded by him and then trust the learned advocate to do the rest of the things... Therefore, the party having done everything in his power to effectively participate in the proceedings can rest assured that he has neither to go to the High Court to inquire as to what is happening in the High Court with regard to his appeal nor is he to act as a watchdog of the advocate that the latter appears in the matter when it is listed."
The Tribunal concluded that Rule 48's 30-day limitation does not apply where delay stems from counsel's intentional misconduct, as Section 238A IBC invites application of Section 5 Limitation Act, which requires only "sufficient cause" to the satisfaction of the Court. The appellant's persistent efforts to obtain no-objection certificate and explanation of counsel's deliberate breach constituted sufficient cause.
The Verdict
The Appellant succeeded. The Tribunal set aside the impugned order dated 13.11.2025, recalled the order dated 08.11.2023 dismissing I.A. No. 1061/2021, and allowed the Restoration Application I.A. No. 1570/2024. The I.A. No. 1061/2021 (seeking payment of Rs. 20,72,84,722/- as CIRP cost) was directed to be considered on its merits by the Adjudicating Authority. All pending interlocutory applications were ordered to be closed.
What This Means For Similar Cases
Counsel's Deliberate Default vs. Negligence
This judgment draws a critical distinction between counsel's negligence (inadvertent non-appearance) and deliberate default (intentional non-appearance with mens rea). Where counsel deliberately absents themselves despite assurances, the appellant cannot be barred from seeking restoration due to delay, even if prolonged. Practitioners must:
- Document all efforts to engage counsel (emails, letters, WhatsApp chats)
- Seek no-objection certificates persistently before engaging new counsel
- Gather evidence of counsel's intentional breach (e.g., false assurances about office/practice)
Section 238A IBC Overrides Rigid Limitation
Section 238A of the IBC introduces discretionary limitation for interlocutory proceedings under the Code. Unlike strict limitation in final adjudications, applications like restoration petitions are governed by Section 5 Limitation Act, requiring only "sufficient cause" to the Court's satisfaction. Key takeaways:
- Limitation period is not rigidly 30 days under Rule 48 NCLT Rules
- Tribunals may condone delay to prevent injustice from counsel's misconduct
- Focus shifts to appellant's diligence (e.g., pursuing no-objection certificates)
Ethical Obligations Under Bar Council Rules
The judgment reinforces Rule 39 of the Bar Council of India Rules (derived from Section 49(1)(c) Advocates Act, 1961), which prohibits a counsel from appearing in a case where a vakalatnama is already filed without prior counsel's consent. Practitioners must:
- Obtain explicit no-objection from existing counsel before filing new vakalatnama
- If consent is unreasonably withheld, apply to court stating reasons for non-production
- Never permit junior colleagues to handle statutory company matters without personal appearance
